Double top? Most people guess wrong
Two peaks at the same price. Double top, right? Not yet. It only counts after one thing happens.
- Two peaks at the same price are not a signal yet.
- The neckline is the lowest point between the two peaks.
- Wicks below the neckline don't count. Only a close below confirms it.
- Sellers act on that close, with a stop above the peaks.
The real chart used in this lesson
Real USDJPY 4-hour chart · Jul 21 – Jul 30 · quiz: EURUSD 4-hour
Quiz at the end: Two peaks on this euro chart. Is the double top confirmed: yes, no, or not yet?
Full transcript
Two peaks at the same price. Double top, right?
Not yet. It only counts after one thing happens.
Look at this dollar yen chart. Peak one, around 163.98.
Peak two, a few days later, at 163.94. Almost the same price.
Most traders call it a double top right here, and sell. Too early.
First, find the neckline. It's the lowest point between the two peaks.
On this chart, that's 163.32.
Now watch. Price poked below it three times, with wicks.
But every one of those candles closed back above. Not confirmed. Not a top yet.
Then this candle closed below the neckline. That is the confirmation.
Only now is it a double top. Before that, it was just two peaks.
That close is where sellers act, with a stop above the peaks.
Save this. Two equal peaks: not yet. A wick below the neckline: still not. A close below the neckline: confirmed.
Your turn. Two peaks on this euro chart. Is the double top confirmed? Yes, no, or not yet? Comment below.
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AI-voiced; written and reviewed by the Borearis Research Team. For education only, not investment advice. Trading involves risk.